COLOMBO: Top German diplomats stationed here think that it will be in the long term interest of Sri Lanka to enter into the proposed Economic and Technical Cooperation Agreement (ETCA) with India.
In an informal interaction here on Tuesday, the diplomats said that if a small country like Lanka is to attract Foreign Direct Investment (FDI), it will have to serve a larger market. In Lanka's case it will make sense to serve India which is the nearest large market. The ETCA would pave the way for it.
They further said that German business sees it the same way.In fact future German investments in Lanka would be coming through the Mumbai based Indo-German Chamber of Commerce since that chamber is the most interested.
In Germany's view, trade would not grow outside the framework of regional as well as international trade pacts. East Asia and Europe grew thanks to economic pacts among themselves.
It is imperative for Lanka to get money through trade and FDI rather than through foreign loans.
Lanka is not entitled to aid and Chinese loans are expensive they pointed out.
Germany's worries in this regard stem from the widespread agitation in Lanka against the ETCA by professional and opposition groups.
These groups feel India will overwhelm Lanka and Indian professionals will flood the Lankan job market.
However, increased earnings through trade requires increase in tradeable goods and here FDI would help. But to get FDI, Lanka would have to put its house in order.
There is the issue of land availability; safety of investments; a credible judiciary; and an efficient bureaucracy. Above all, there should be political stability which is in question now.
A major element in political stability in Lanka is the ethnic question and post war reconciliation.
While there is progress in these areas, the process needs to be speeded up.
Germany thinks that Lanka has no option but to abide by the October 1, 2015 UNHRC resolution on accountability.
While reconciliation takes years, Lanka could move faster on setting up restitutive justice mechanisms, address the question of missing persons, and release of war time detainees.
Germany also thinks that foreign judges in the Judicial Mechanism are essential to make it credible in the eyes of the war victims.
The German diplomats made it clear that the restoration of the European Union's trade concessions to Lanka under the General System of Preference Plus (GSP PLUS) will depend on how Lanka is addressing reconciliation issues and implementing the UNHRC resolution.
On how Germany views China's inroads into Lanka, the diplomats said that While there is no objection to China's promoting its economic interests, worries arise when economic projects are used to achieve strategic interests impinging on others' security, and when the strategic push disregards accepted international norms.